Things to Consider for your First Buy-and-Hold Texas Commercial Real Estate Investment

Location, location, location holds true for Texas Commercial Real Estate investments just as it does for many businesses. Whether your first investment will be a buy and hold or a fix and flip, you’ll need to consider the following in order to make your first project a solid one that you can build on.

Know the market and what it will sustain as far as rent for your potential property. When scouting out the numbers, include the property taxes and insurance. A note on property taxes: remember that this is considered Texas Commercial Real Estate and will have higher taxes than an owner-occupied property. If the house or apartment is located in a flood plain or in an area where earthquakes are common occurrences or smack dab in tornado alley, you will likely need additional insurance coverage that will, again, bite into your profit.

Check into the neighborhood schools. Choosing a neighborhood with a good school district is likely to attract families as compared to properties that are near universities and will likely be filled with students who may not be year-round residents. Check out crime statistics and know the local perks that will attract renters such as dining, movie theaters, gyms and public transportation. Many in the millennial generation are looking for “walkable” neighborhoods with gathering spots such as restaurants, pubs or cafes. You’ll want to be aware of who your target renter is so you can renovate and place ads accordingly.

To use or not to use a property management company, that is the question. This consideration is important for a number of reasons. If you do not use a company, your properties will have to be in driving distance from your present location, or you will need to have maintenance personnel in place for those plumbing and repair issues that can occur at any time of day. The benefits: they will also assist with screening tenants, decreasing turnover and collecting rent, enforcing late fees and issuing an eviction, if need be. The negatives: cutting into the profit margins. Typical fees for single family homes are around 10 percent of the monthly rental value of the property or anywhere from 4 to 7 percent for multifamily units. Some charge flat monthly fees.

Funding for your First Real Estate Investment

Bob Hope said it well: “A bank is a place that will lend you money if you can prove that you don’t need it.” Texas Commercial Real Estate loans for first time investors can prove difficult to obtain. If you do find funding via the conventional route, most require a minimum of 20 percent down. Finding a for-sale-by-owner property is another approach that works well for some investors.

A hard money loan is typically a short-term asset-based loan that offers quick capital.

At Level 4 Funding, we offer buy-and-hold Texas Commercial Real Estate loans that are ideal for individuals looking to purchase rental properties. We have become the go-to capital source for many investors that work with us for all their financing needs. With hundreds of private hard money lenders in our rolodex, we can often find the funding that you need. Call us for a no obligation quote.

Dennis Dahlberg
Broker/RI/CEO/MLO
Level 4 Funding LLC Private Hard Money Lender
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
Dennis@level4funding.com NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave |Austin | Texas | 78701

About the Author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.